Early this afternoon, Netflix Inc. (NFLX) revealed a multiyear deal with DreamWorks Animation SKG to release titles by 2013. Considering the debacle of the failed negotiations with Liberty Starz Group earlier this month to release far more Disney films to viewers and the subscription increases that have only received bad press, this is extraordinary news. It shows initiative, to say the least, however with missed opportunities left and right, and a general stalling of strategic planning, it would be foolish to assume that Netflix is in the clear quite yet.
Since appearing on the scene, Netflix has proven what contributed to the ruin of Blockbuster (and even, to a certain extent, Enron) to actually be a reality. There is no doubt that they have a solid business model with great potential. The folly, however, is the future. It is no secret that many investors in the field have discussed short selling and the reason is obvious: while Netflix appears to be on top of the current, streaming films field, they show no prospects for increased development other than trying to retain further movie releases. Yet with more and more companies entering the field, this will simply not prove to be enough.
While the DreamWorks deal is great news, by tomorrow, this news may very well prove to be some of the same news we’ve already heard from the industry: we are expanding our options. Yet what they truly need to do is increase their presence, something that this deal will not do. My suggestion? Social networking, a point that this website has strongly endorsed. Their presence seems oddly absent in the social networking world, whether from Facebook to Google +. Netflix is a social phenomenon in its self and deserves to be expressed as such: to friends and family in particular. Allowing more community and interaction within the site, or better yet, pairing up with sites like Facebook and particularly Google + (as it begins its long journey to potentially making Facebook look like Myspace) would not only earn more subscribers, but more dedicated subscribers at that. It’s as simple as an app or a widget.
Till then, what we are looking at is a desperate attempt by Netflix to remain relevant. They are a long way from becoming a figment of the past but without innovative thinking and a rationale that is forward thinking, this deal will simply prove to be too little, too late.